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23 Cards in this Set

  • Front
  • Back
an institution or mechanism that brings together buyers ("demanders") and sellers ("suppliers") of particular goods, services, or resources
a schedule or a curve that shows the various amounts of a product that consumers are willing and able to purchase at each of a series of possible prices during a specified period of time
law of demand
there is an inverse relationship between price and quantitiy demanded
diminishing marginal utility
successive units of a particular product yield less and less marginal utility
income effect
a lower price increases the purchasing power of a buyer's money income, enabling the buyer to purchase more of the product than she or he could buy before, a higher price has the opposite effect
substitution effect
at a lower price buyers have the incentive to substitute what is now a less expensive product for similar products that are now relatively more expensive ("a better deal")
determinants of demand
factors that affect purchases such as consumers' tastes, number of consumers, consumers' incomes, the prices of related goods, consumer expectations about future prices and incomes
normal(superior) goods
products whose demand varies directly with money income
inferior goods
goods whose demand varies inversely with money income
substitute good
one that can be used in place of another good
complementary good
one that is used together with another good
change in demand
shift of the entire demand curve
change in quantity demanded
a movement from one point to another point on a fixed demand curve
a schedule or curve showing the amounts of a product that producers are willing and able to make available for sale at each of a series of possible prices during a specific period
law of supply
there is a direct relationship between price and quantity supplied
determinants of supply
resource prices, technology, taxes and subsidies, prices of other goods, price expectations, the number of sellers
change in supply
shift in the entire supply curve
change in quantity supplied
a movement from one point to another on a fixed supply curve
excess supply
excess demand
equilibrium price
no shortage and no surplus so price is at rest
equilibrium quantity
quantity supplied and quantity demanded are in balance
rationing function of prices
the ability of the competitive forces of supply and demand to establish a price at which selling and buying decisions are consistent